Budapest, 26 November 2021 — In 2021 Q3, Hungarian corporates’ loans outstanding grew to an extent that is remarkable in international terms as well. Loans outstanding increased by 9 per cent in one year, and the annual growth rate was 15 per cent also taking into account the corporate bonds held by banks. Depletion of the allocation of the FGS Go! programme did not result in any tension in corporate financing: during the quarter, the ratio of market-based loans within new disbursements exceeded 75 per cent and thus approached its pre-pandemic level. Household loans outstanding also expanded dynamically during the quarter, bringing the annual growth rate to 16 per cent. The volume of loan contracts concluded during the quarter exceeded pre-pandemic levels, with a strong contribution from the new home subsidies that were launched in 2021.
In 2021 Q3, corporate loans outstanding expanded by HUF 427 billion as a result of transactions, with annual loan growth consequently rising to 9 per cent. This growth rate, which was outstanding in an international comparison, was supported by the instalment-reducing effect of the moratorium as well as by central bank and government loan and guarantee schemes. In the third quarter, corporations concluded new loan contracts in the amount of HUF 741 billion: while this fell 22 per cent short of the same period of 2020, which was affected by the coronavirus but also by subsidised credit schemes already, it exceeded the same quarter of 2019 by 15 per cent. According to preliminary data, as a result of the subsidised credit schemes, the loans outstanding of micro, small and medium-sized enterprises expanded by roughly 20 per cent between September 2020 and September 2021. In the quarter following the nearly complete depletion of the allocation of the FGS Go! scheme, the ratio of market-based loans within new disbursements exceeded 75 per cent and thus almost returned to the pre-pandemic level. In parallel with the interest rate hike cycle that started in June and the increasing share of market-based loans, the contract amount weighted average interest rate on HUF-denominated SME working capital and project loans rose during the quarter by 133 and 94 basis points to 3.1 per cent and 3.3 per cent, respectively, by end-September.
According to the responses of the banks participating in the Lending Survey, there were no major changes in credit conditions in any company size categories in the corporate segment in the third quarter. Banks continued to observe strengthening credit demand in the past quarter, although the ratio declined, and looking ahead they expect expanding demand, despite the phasing out of FGS Go! in September.
In 2021 Q3, new loans provided to households exceeded repayments by HUF 391 billion in the credit institutions sector, with the annual growth rate of loans outstanding thus reaching 16.3 per cent in September. This growth, which was outstanding in an international comparison, was supported by the instalment-reducing effect of the moratorium. According to our estimates, excluding this effect would have resulted in annual expansion of 8.9 per cent. The volume of HUF 733 billion of new household loan contracts concluded during the quarter exceeded disbursements in the same period of the previous year by 35 per cent and was also 10 per cent higher than disbursements in 2019, which was a period still free of the negative effects of the pandemic. This growth was primarily related to housing loans, as the quarterly disbursement of HUF 376 billion set a new record, corresponding to a nearly 70-per cent expansion compared to the pre-pandemic level, with a significant contribution from the home subsidies launched in 2021.
The institutions responding to the Lending Survey did not change their housing loan conditions in Q3 and are also not planning any changes in the next half year. In net terms, 14 per cent of the banks eased the standards of consumer loans, but looking ahead they already see prospects of tightening. In relation to the FGS Green Home Programme launched in October, institutions expect demand for housing loans, which was picking up during the quarter, to strengthen further in the next half year as well.
According to the Q3 Bank Sentiment Survey, on the whole, the banking sector experienced a major improvement in economic activity in the past half year. Banks’ responses suggest that the tightening of the regulatory environment – such as the decisions related to the moratorium – pointed to deterioration, whereas buoyant demand, strong market competition, easier access to funds and the recovery of the macroeconomic environment pointed to improvement. Nevertheless, a deterioration in the outlook for profitability and in access to funds may become more pronounced in the next half year, which – together with the materialisation of counterparty risks – may significantly restrain the improvement in business sentiment.
The MNB will publish the next Trends in Lending report in March 2022. The objective of the publication is to present a detailed picture of the latest trends in lending and to facilitate the appropriate interpretation of these developments. To this end, the report elaborates on the developments in credit aggregates, demand for loans perceived by banks and credit conditions, based on the Lending Survey, and the balance sheet and interest rate statistics of the banking system. Detailed results and the figures of the Lending Survey are available on the MNB’s website at the following link:
Detailed results and the figures of the Bank Sentiment Survey are available on the MNB’s website at the following link: